Judgment:
P.R. Chandrasekharan, Member (Technical)
This appeal is directed against the order-in-original No.52/CAC/CC(G)/SLM/2011 dated 28-7-2011 passed by the Commissioner of Customs (General), New Custom House, Mumbai, revoking the CHA licence No. 11/266 of the appellant, M/s Pandole Shahrukh andCo. (CHA in short).
2. The facts relevant for consideration in this case are as follows:
2.1 The Directorate of Revenue Intelligence investigated a case of fraudulent exports of copper and brass ingots by M/s Aditya Recycling P. Ltd. and M/s Khaitan Textile Mills Ltd., both 100% Export Oriented Units, by mis-declaration of the weight of the ingots sought to be exported for fulfillment of export obligation. The investigation revealed that M/s Aditya Recycling P. Ltd. had, in the case of 10 export consignments, declared the weight of copper ingots exported as 249.515 MT having a FOB value of Rs.2,70,21,151/- whereas the goods actually exported were 24.211 MT having an FOB value of Rs.26,19,458/- . The balance quantity were diverted into the domestic market thereby evading customs duty of Rs.1,61,15130/-. Similarly in the case of 21 export consignments, M/s Khaitan Textile Mills P. Ltd. had declared the weight of copper ingots at 473.580MT having an FOB value of Rs.5,33,30,482/- in the export documents whereas the actual quantity of goods exported were only 57.717 MT with an FOB value of Rs.65,07,157/-, thereby evading customs duty amounting to Rs.2,38,40,636/-. The CHA engaged for these exports were the appellant M/s Pandole Shahrukh and Co.
2.2 Investigation revealed that Mr. Sudhakar Yashwant More, Managing Partner of the appellant firm and two employees of the firm, Mr. Deepak Kanse and Mr. Anil Naik were fully aware of the short shipment of the goods and actively aided and abetted the fraudulent exports. They knowingly presented to the customs authorities check lists and shipping bills not corresponding to the goods actually exported and also presented the short shipped goods for inspection. As per the instructions of the exporters, they always shipped the goods as ‘Full Container Load’ to avoid detection and passed on this instruction to the agents of the shipping lines and accordingly 14 consignments which should have been sent as ‘LCL’ consignments were sent as ‘FCL’ consignments. The CHA also collected ‘FCL’ charges for all these consignments from the exporters for extending their support and co-operation in fraudulent exports by mis-declaration of both weight and value.
2.3 On completion of the investigation by the DRI, inquiry proceedings were initiated against the CHA and the following charges were imputed, namely, violation of-
(1) Regulation 13 (d) of Custom House Agents Licensing Regulations, 2004 (CHALR, in short), for failure to advise the client to comply with the provisions of the Customs Act and in case of non-compliance by the client, bringing the same to the notice of the Customs Authorities;
(2) Regulation 13(a) for not obtaining authorization from the exporter for each of the transactions from their clients;
(3) Regulation 19(8) for failure to exercise necessary supervision to ensure proper conduct of the employees;
(4) Regulation 13(k) for non-maintenance of records and accounts in respect of the fraudulent exports; and
(5) Regulation 13(n) for not discharging the duties with utmost speed and efficiency.
2.4 On completion of the inquiry, the Inquiry Officer held the charges as proved on the basis of the statements recorded by the DRI under section 108 of the Customs Act, 1962, and the documents available on record. On the basis of the inquiry report and after taking into consideration the defence replies, the ld. Commissioner passed the impugned order revoking the CHA licence No. 11/266 and also forfeiting the entire amount of security deposit under Regulation 22(7) of the CHALR, 2004. Hence the appellants are before us.
3. Mr. Sujay N. Kantawala, Advocate and Ld. Counsel for the appellant made the following submissions:-
(a) the impugned order suffers from the vice of the excessive use of powers and jurisdiction vested with the adjudicating authority in as much as the adjudicating authority did not take into consideration all aspects of the case and the said order is arbitrary and unilateral;
(b) their Licence was under suspension since last 7 years which itself is an extenuating factory in favour of the appellant;
(c) there was a delay about 3 months in passing the impugned order after conclusion of the hearing by the adjudicating authority which shows his insensitivity and on this ground alone the impugned order should be set aside;
(d) the statements of the appellant’s employees were obtained under duress and the statements were retracted at the time of replying to the show cause notice in the customs case;
(e) the prosecution has not established conclusively that the partner and employees of the appellant were having knowledge about the mis-declaration in weight;
(f) the CHA has no role to play in the examination/inspection of the goods by the Customs Officers;
(g) Cross examination of the exporters/their representatives, though allowed, could not take place as they were not made available;
(h) While deciding the customs offence case in respect of the fraudulent exports, though penalty was imposed on the appellant, the same has been stayed by this Tribunal vide order dated 23-6-09 which shows that there is prima-facie merit in favour of the appellant;
(i) The role of the Customs Officers in examination/inspection of the cargo were not examined and only the CHA has been put to dock in the matter;
(j) The charge against the appellants have been said to be proved relying mainly on the testimony of the exporters and the same has not been tested in cross-examination;
(k) Though the partner of the CHA firm has admitted his knowledge about the frauds committed by the exporters, the CHA firm was never in the knowledge;
(l) The appellant enjoys an excellent reputation and has been holding the CHA licence for the last 51 years and had not come to adverse notice of the department;
(m) The punishment accorded is quite harsh and not commensurate with the gravity of the offence and relies on the judgments of this Tribunal in the following cases, namely,-
(i) Vipul Pranlal Doshi [2012 (279) ELT 427]
(ii) Adarsh Clearing Agency [Order No. A/547 to 549/2011/CSTB/C.I dated 28-11-2011]
On the basis of the above submissions, he pleads for setting aside the impugned order and restoring the CHA licence of the appellant.
4. The Ld. Superintendent (AR) appearing for the Revenue strongly opposes the plea and argues that the charges against the appellant are very grave. The Partner and the employees of the appellant firm had categorically admitted their involvement in the fraudulent exports, in their statements recorded under section 108 of the Customs Act. Belated retraction is only an afterthought. The Hon’ble High Court of Delhi has ruled that statements recorded under section 108 can be relied upon in the proceedings under CHALR. In a number of recent judgments, the Hon’ble High Courts at Mumbai, Ahmedabad and Hyderabad have held that revocation of CHA licence is justified in cases involving fraud and corruption and these judgments apply squarely to the facts of the present case. Accordingly he prays for upholding the impugned order.
5. We have carefully considered the rival submissions and also perused the records.
5.1 From the records of the case, it is seen that mis-declaration of the weight and consequently the value of the export consignments has been clearly established in this case as can be seen from the panchanama proceedings dated 23-9-03 and 26-9-03. For example in respect of S/B no. 2336736 dated 16-9-03, the declared weight of copper ingots was 25.950MTs whereas the actual weight was only 1.583 MTs. Similarly in the case of S/B Nos. 2333909 dated 13-9-03, the declared weight was 25.990MTs whereas the actual weight was 3.031 Mts. So is the case with S/B nos. 2321908 and 2321943 both dated 5-9-03 and 2323994 dated 6-9-03 wherein the declared weight of brass ingots was 76.810 MTs whereas the actual weight was only 7.521 MTs. Again in the case of S/B No. 2329210 dated 10-9-03, the declared weight was 20.920 MTs whereas the actual weight was 2.329 MTs. In all these cases the CHA was the appellant firm and the logistics support was provided by M/s V-Excel Worldwide Logistics, a Division of M/s Pundole Sharukh and Co., the CHA.
5.2 Mr. Sudhakar More, partner of the CHA firm, in his statements dated 24-9-03 and 1-10-03 had, inter alia, admitted that his CHA firm had handled the export clearance of M/s Aditya and his CHA firm offered complete export services including transportation from factory to docks, warehousing of goods, if required, documentation, clearance, handling, packing, repacking and CHA work. Since the logistics support was provided by the CHA firm, they should have been aware of the full details of the consignments under export and the mis-declaration made in the export documents with regard to the weight, number of pieces, FOB value of exports. This position has been admitted by Mr. Deepak Kanse, Docks Clerk of the CHA firm who had handled the work at JNPT port. In his statements given under section 108 of the Customs Act on 18-9-03, 3-10-03 and 15-10-03, he had admitted that he had noticed the discrepancy between the particulars declared in the export documents and the actual position with regard to the weight and numbers of the ingots exported and had brought this fact to the notice of Sri. Sudhakar More who instructed him to proceed with the work of getting the goods stuffed in the container. Similarly, Sri. A.V. Naik, Marketing Executive of M/s V. Excel Worldwide Logistics, a Division of the appellant firm, in his statements dated 9-10-03 and 19-11-03 recorded under section 108 of the Customs Act had admitted that Sri Kanse and Mr. Hardep Gill of the M/s Venus Maritime Services had brought to his notice the short shipment of goods and the said fact was brought to the notice of Sri. Sudhakar More who did not give any direction and Sri Kanse informed him that More had instructed him to proceed with the goods. Sri. Naik had also admitted that he had informed Shri. Hardeep that though the cargo was much less than that declared in Export documents, the cargo should be stuffed as FCL since Sri. More was collecting FCL charges in respect of all the export cargo. These statements had been corroborated by the statement of Mr. Hardeep Singh Gill, Marketing Executive of M/s Venus Maritime Services Pvt. Ltd., the shipping agents. Thus the entire export transactions were a sham and everyone, the exporter, the CHA, the logistics firm and the shipping agent colluded and connived with each other so as to defraud the exchequer. Though, Mr. More, Mr. Kanse and Mr. Naik had retracted their statements, the same was not done immediately or at the first available opportunity but only in reply to the show cause notice issued under the Customs Act vide notice dated 23-3-04. Thus more than 6 months had elapsed between the deposition of the statement and the retraction. It is a well settled legal position that such belated retraction has no sanctity in the eyes of law and has to be treated as pure afterthought.
5.3 It is in the light of the above context, one has to look at the CHALR proceedings. In as much as the partner of the CHA firm and two of their employees have clearly admitted to aiding and abetting the fraudulent exports, there is nothing that needs to be proved in the instant case. It is a well settled position in law that ‘admitted facts need not be proved’ as held by the Hon’ble High Court of Madras in the case of Asstt. Collector of Customs vs. G. Raghupathy [1998 (98) ELT 50 (Mad)]. The Hon’ble High Court of Delhi in the case of Jasjeet Singh Marwaha vs. U.O.I reported in 2009-TIOL-87-HC-DEL-CUS has held that the statements recorded under section 108 of the Customs Act can be relied upon in the proceedings under the CHALR, 2004.
5.4 The Ld. Advocate for the appellant has argued that principles of natural justice has been violated as the appellants have been denied cross examination of the exporters and the shipping agent representative. This contention is misplaced and completely wrong for the reason that the case against the appellant is built on the statements recorded from their own Partner and employees who have clearly admitted to aiding and abetting the fraudulent acts committed by the exporters. The statements of the exporters/shipping agent are not the sole basis for arriving at the finding about the liability of the appellants and therefore, denial of cross examination of the exporter could not be said to have adversely affected the interests of the appellant to prove his bonafide.
5.5 The next argument of the Ld. Advocate that the CHA has no role to play in the examination/inspection of the cargo is totally ill-conceived. As per section 51 of the Customs Act, ‘Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation.’ Therefore, the responsibility of the CHA is not over until the goods are examined and the Let Export Order is given and the goods are handed over to the shipping line for loading on to the vessel.
5.6 An argument has been put forth that since the imposition of penalty on the CHA has been stayed by this Tribunal, it shows prima facie case in favour of the appellant. We have perused the said order of this Tribunal. The stay has been granted only on the ground that both the CHA firm and partner need not be penalized for the same transaction and penalty on one of them will suffice. This shows that there is no exoneration of the CHA in the customs case at all.
5.7 Since the CHA and his employees actively abetted and aided the fraudulent exports, the charge of violation of Regulation 13(d) and 13(n) stand clearly established. In this case, it is also worth noting that the when the cargo was LCL, the CHA directed the shipping line to book it as FCL and also collected FCL charges from the exporter as a consideration for their help and support in committing the fraud. Further Sri. Kanse, in his statement has admitted that he had not obtained copies of the transport document from the transporter/trucker who brought in the export goods for examination and stuffing. Therefore, violation of regulation 13(k) is also established. Since the partner and the employees of the CHA firm actively participated in the fraud, the charge of lack of supervision on the conduct of the employees is also clearly established, evidencing violation of Regulation 19 (8) of the CHALR. Thus all the charges except violation of Regulation 13(a) has been established beyond doubt in the instant case. The reliance placed on the Vipul Pranlal Doshi and Adarsh Clearing Agency case (cited supra) does not help the cause of the appellant, since in those cases, the offences involved were minor infractions of CHALR. There was no active involvement of the CHA in the commission of the offence. Those are not the facts obtaining in the present case. Since this is a case of active participation in a fraud perpetrated on the exchequer involving substantial amount of revenue, we are of the considered view that maximum punishment by way of revocation of CHA licence is justified.
5.8 The Hon’ble Bombay High Court in the Commissioner of Customs vs. Worldwide Cargo Movers [2010 (253) ELT 190 (Bom)], while dealing with a case relating to smuggling of cars, held as follows:-
“17. ……....We are conscious that the punishment has to be commensurate with the misconduct and that by revocation the respondent and its employees are going to suffer. At the same time, we can not forget that though it is the right of a citizen to carry on his business or profession, it is subject to reasonable restrictions and conditions. In the present case, those conditions were already stipulated. In the case of Arvind Bhagat (supra), the order of the Madras High Court has been left undisturbed by the Apex Court. It was a case where the CHA had failed to discharge his obligation to exercise proper supervision. In the case of Sri Kamakshi Agency (supra), the CHA was held responsible for the fraudulent activities of a third party whom it had delegated its functions. That was also left undisturbed by the Supreme Court. Here, the CHA has brazenly defended his Regulation 8 employee who gave a fake name of his brother as importer for undervaluing the imported car. Thus, the employee of the CHA was party to the Firm. The CHA has not disowned him in the reply filed by him before the appellant. That being so, he is clearly responsible vicariously.
18. In our view, the Tribunal has committed a grave error in interfering with the decision of a domestic authority. In a departmental proceeding one has to see whether the principles of natural justice are followed and the findings are justified from material on record. Once both these aspects are satisfied if an outsider Tribunal interferes, its findings and order will be improper and perverse which is what has happened in the present case. Similarly when one comes to the disciplinary measures, one must not lose sight of the fact that the appellant-Commissioner of Customs is responsible for the happenings in the Customs area and for the discipline to be maintained over there. If he takes a decision necessary for that purpose, the Tribunal is not expected to interfere on the basis of its own notions of the difficulties likely to be faced by the CHA or his employees. The decision is best to be left to the disciplinary authority save in exceptional cases where it is shockingly disproportionate or malafide. That is not the case here.” (emphasis supplied)
5.9 The Hon’ble High Court of Andhra Pradesh in the case of CCandCE, Hyderabad vs. H.B. Cargo Services [2011 (268) ELT 448(AP)] dealing with a case wherein the CHA had signed blank shipping bills to exporters for a consideration of Rs.150 per bill held as follows:-
“15. While the punishment imposed on the CHA has to be commensurate with the gravity of the proved acts of mis-conduct as, on revocation of his licence, the CHA would suffer, it must not be lost sight of that, though it is the right of a citizen to carry on his business or profession, it is subject to reasonable restrictions and conditions, which, in the present case, are stipulated under the CHALR. As noted herein above, blank shipping bills were issued by the partner and authorized representative of the CHA for a consideration of Rs.150/- per shipping bill. In cases involving corruption there can not be any punishment lesser than the maximum, i.e., revocation of the licence. No other lesser punishment can be contemplated in such cases. Any sympathy shown in such cases is totally uncalled for and opposed to public interest. The consideration received for the act of misconduct may be small or large. It is the act of corruption that is relevant, and not the quantum involved in such acts.”. (emphasis supplied)
5.10 In the OTA Kandla Pvt. Ltd. vs. U O I [2011 (269) ELT 457] the Hon’ble High Court of Gujarat was considering a case of sub-letting of licence, non-maintenance of statutory records, obtaining customs pass for non-employees, etc. While upholding the revocation of CHA licence, the Hon’ble High Court held as follows:-
“14. In view of the above principles laid down by the Hon’ble Supreme Court in various judgments, it clearly transpires that the judicial review of administrative action or of proportionality of punishment is permissible only if the decision of the decision maker is found to be illegal, unreasonable, irrational or suffering from any procedural impropriety, and that the High Court in exercise of jurisdiction under Article 226 or 227 should not interfere with the legal orders of Administrative Authorities. So far as the facts of the present case are concerned, as stated hereinabove, respondent no.3, the CEGAT has upheld the order of respondent no.2, revoking the licence of the petitioner as CHA on the ground of petitioner having committed breach of statutory regulations and the misconduct by misusing its licence. In the opinion of this Court, once the decision of the respondent authorities that the petitioner committed violation of statutory regulations and the misconduct is found to be within the legal parameters, all the legal consequences as a result of such violation and the breach have to follow. The case of the petitioner being the case of contravention of said regulations and misuse of licence as CHA, the respondent authorities have rightly revoked the licence of the petitioner. The said decision having been arrived by the respondents, after taking into consideration all the relevant material and the said Regulations, and after following the due process of law, it could not be said that the said decision was illegal, unreasonable, perverse or irrational. Under the circumstances, it could also be not said that the punishment of revocation of licence was a harsh punishment or the punishment dehors the doctrine of proportionality. The petitioner having failed to point out any perversity or unreasonableness on the part of the respondent Authorities warranting judicial intervention, this Court does not find any merits in the present petition.”.
5.11 The ratio of these judgments apply squarely to the facts of the present case. It is not a case of minor infractions of the provisions of CHALR but a major active involvement in aiding and abetting fraudulent exports leading to substantial loss of revenue to the exchequer. Therefore, the maximum punishment prescribed in the CHALR is clearly attracted.
6. In the light of the following discussion, we do not find any merit in this appeal and accordingly we dismiss the same.